Public Service Pensions Update: February 2026
Published on 20th February 2026
Welcome to the February 2026 edition of the UK Public Service Pensions Update
This month we cover two developments to the government's access and fairness reforms to the Local Government Pension Scheme (LGPS), three other developments affecting public service pension schemes, HMRC's latest pension schemes newsletter and two Pensions Ombudsman decisions.
If you would like to discuss anything in this newsletter, please contact one of the experts listed at the end.
Focus on the LGPS
Access and fairness reforms | Government response confirms intention to proceed with majority of proposals
The government has published its response to the LGPS "access and fairness" consultation confirming it will proceed with the proposals albeit subject to modifications in certain cases.
The response to specific proposals are outlined below.
- Survivor benefits equalisation. The government will proceed with equalising survivor pension entitlements regardless of the sex of the eligible member or their survivor, uplifting benefits to the most generous level with backdating to when the relationship types were recognised in UK law. Taking into account the comments on the complexity of the calculations, the government will work with the Scheme Advisory Board to produce guidance addressing a number of areas.
- Death grant changes. The government will remove the age 75 cap on death grant eligibility (backdated to all deaths on or since 1 April 2014) and (from the date of implementation) remove the requirement for death grants to be paid to personal representatives if unpaid within two years.
- Cohabitee survivor pensions. The government will proceed with amendments to the survivor benefit rules of the LGPS to remove the requirement that, for any death that occurred between 1 April 2008 and 31 March 2014, a surviving cohabitee of an LGPS member must have been nominated by that member to be eligible for receipt of a survivor pension. The government confirmed that the changes will not be applied to a date earlier than 1 April 2008.
- Gender pension gap initiatives. The government will proceed with making authorised unpaid leave automatically pensionable, with a threshold of 14 days (rather than the 31 day threshold initially proposed). The cost of buying back unpaid leave over 14 days will be aligned with standard member contribution rates with a time limit of one-year or when the member leaves the employment, if sooner. On the proposal to remove the three-year limit on compulsory employer contributions on unpaid leave, following mixed views on this proposal the government will instead allow scheme employers to continue to contribute beyond three years, as an employer discretion. The government will also proceed with amending the definition of child-related leave (for cases where the relevant leave starts on or after 1 April 2026) to include all periods of additional maternity, adoption and shared parental leave without pay.
- Gender pension gap reporting. For 2025, the government will require a limited form of gender pension gap reporting and reporting at the employer level will not be required. The government confirmed its intention to work with the sector towards fuller gender pension gap reporting for the 2028 valuation. The government will also proceed with proposals on opt-out reporting, starting from the 2026-27 scheme year and to be published in annual reports.
- Forfeiture proposals. The government will proceed with proposals on forfeiture; that is, removing the requirement that a member must have left employment because of the offence, removing the time limit to make a forfeiture application and removing the regulation which allows a scheme employer to make interim payments to a person who would be entitled to receive a benefit payment if a forfeiture direction was not given. Equivalent modifications will be made to apply to earlier schemes.
Other policies. The government will also proceed to implement the other policies in the consultation (to deal with issues with the operation of the McCloud remedy and other technical regulation changes), although modified slightly in some respects to take on board comments in the responses to the consultation.
Access and fairness reforms | Gender pension gap reporting | GAD guidance published
In parallel with the access and fairness consultation response, the government has published the Government Actuary's Department guidance for gender pension gap reporting, to support reporting in the 2025 fund valuations. This amends the draft that was shared with fund actuaries in August 2025, following the feedback that was received.
All schemes
Civil Service Pension Scheme | Pension Recovery Plan Update
The Cabinet Office has published a Civil Service Pension Recovery Plan update on the action taken to address unacceptable service delays being experienced by members of the Civil Service Pension Scheme. The recovery effort is being delivered through a cycle of three-week "sprints" to "ensure remedial activity is appropriately prioritised and robust longer-term foundations are laid to restore levels to an acceptable service as quickly as possible".
Local Government Pension Scheme (Scotland) | Ill health retirement and early payment of deferred benefits
The Scottish Public Pensions Agency has published updated guidance to ill health retirement and early payment of deferred benefits covering active and deferred members of the Local Government Pension Scheme (Scotland). This provides guidance to employing and administering authorities around ill health retirement and the Internal Dispute Resolution Procedure. Updated template ill health certificates have been issued to accompany it.
NHS Pension Scheme | Employer contribution rates
The Department of Health and Social Care has confirmed that the transitional approach that has operated for employer contributions since 2019/20 will continue in 2026/27.
HMRC | Pension Schemes Newsletter 177
On 30 January 2026, HM Revenue and Customs (HMRC) published pension schemes newsletter 177. Areas covered include removing non-UK resident pension scheme administrators before 6 April 2026 and an invitation to participate in user research around the design of the new digital service for reporting inheritance tax payment notices.
The Pensions Ombudsman | Recent decisions
Employer liability for Club Transfer failure (CAS-81099-B2P1)
What did the DPO decide?
The Deputy Pensions Ombudsman (DPO) has upheld a complaint against the NHS West Yorkshire Integrated Care Board (formerly NHS Wakefield CCG, the employer, for failing to complete transfer documentation within the timescale needed to enable an employee, "Mr K", to complete a transfer from the Local Government Pension Scheme to the NHS Pension Scheme on advantageous Public Sector Transfer Club terms.
The DPO found that the employer owed an implied duty to Mr K under the terms of his employment contract to do what was reasonably required to enable Mr K to exercise his right to request a transfer of his benefits within the timescales that would enable him to benefit from a club transfer. The DPO also found the employer owed a common law duty of care to Mr K not to cause him financial harm by failing to carry out administrative tasks or other duties imposed on or assumed by them with due skill and care. It was reasonably foreseeable that a failure to take reasonable care and skill (including to act in a timely manner) would result in harm to Mr K, in the form of the loss of his ability to obtain a club transfer.
While accepting that other parties contributed to the delays, the DPO found it to be more likely than not that the employer’s breach of contract and/or of its duty of care caused Mr K to lose the ability to obtain a transfer on club transfer terms. The employer was directed to submit a claim requesting an extension of the time limits of a club transfer under its discretionary provisions and, failing that, to compensate Mr K for the difference in benefits between club and non-club transfer terms. The employer was also ordered to pay £500 for distress and inconvenience.
Key takeaway
Public service employers should review their transfer processes to ensure that administrative responses to transfer requests are prioritised and completed within a reasonable period to avoid the risk of significant damages arising from administrative failures.
Administrator liable for distress and inconvenience resulting from incorrect benefit estimates generated by automated system (CAS-90501-T3V1)
The Deputy Pensions Ombudsman (DPO) has partially upheld a complaint against NHS Business Services Authority (BSA) in respect of incorrect automated benefit estimates, directing payment of £1,000 for serious distress and inconvenience caused. However, the claim for compensation for financial loss was rejected.
The decision confirms that incorrect benefit estimates do not automatically entitle members to receive the overstated amounts, particularly where estimates contain disclaimers stating they are not intended to be relied upon for final retirement decisions. However, the NHS BSA was responsible for the automated system used to issue incorrect estimates. Drawing on the approach of Mr Justice Sales in NHS BSA v Leeks [2014], the DPO said that NHS BSA has a special position and responsibility as scheme administrator and was required to ensure it had effective automated or other procedures in place to issue reliable and correct benefit estimates to members to enable employers or the Pensions Online system to issue them. It failed in this and did not correct the system causing serious distress and inconvenience.
House of Commons Library | New and updated briefing papers
Recent House of Commons Library briefing papers:
Guaranteed Minimum Pension (GMP) increases
Administration of the Civil Service Pension Scheme
This newsletter covers developments relating to public service pensions in England and Wales with a focus on the Local Government Pension Scheme.
